Equal · Glossary

Every term, its formula, and why it matters

61 terms · 7 groups

Liquidity

Current Ratiocurrent assets ÷ current liabilities: Can the company pay what comes due this year without selling long-term assets?
Quick Ratio(current assets − inventory) ÷ current liabilities: The same question assuming inventory cannot be sold quickly — the stricter test.
Cash Ratiocash & equivalents ÷ current liabilities: The most conservative liquidity floor: cash alone against near-term bills.
Working Capitalcurrent assets − current liabilities: The cash cushion tied up in day-to-day operations; negative can be a red flag or a business model (retailers).

Leverage & solvency

Debt to Equity (DER)total interest-bearing debt ÷ total equity: How much of the company is financed by lenders vs owners — the primary solvency dial.
Liabilities to Equitytotal liabilities ÷ total equity: The broader version of DER — includes payables and other non-debt obligations.
Debt to Assetstotal debt ÷ total assets: What fraction of the asset base is pledged to lenders.
Net Debttotal debt − cash & equivalents: Debt the company could not pay off tomorrow with cash on hand — the number EV is built on.
Interest CoverageEBIT ÷ interest expense: How many times operating profit covers the interest bill; below ~2× the balance sheet runs the company.

Profitability

Gross Margingross profit ÷ revenue: What is left after the direct cost of the product — the ceiling every other margin lives under.
Operating MarginEBIT ÷ revenue: Profitability of the business itself, before financing and tax — the cleanest recurring-earnings signal.
Net Marginnet income ÷ revenue: The bottom line per rupiah of sales — but check Earnings Quality: one-offs live here.
EBITDAEBIT + depreciation & amortization: Operating profit before the accounting cost of past capex — the standard base for EV multiples and debt covenants.
EBITDA MarginEBITDA ÷ revenue: Cash-generation intensity of operations, comparable across depreciation policies.
Return on Assets (ROA)net income ÷ total assets (banks: pre-tax profit ÷ assets, OJK basis): Profit squeezed from each unit of assets — the efficiency of the whole asset base.
Return on Equity (ROE)net income ÷ equity (owners’ basis; banks: after-tax ÷ avg Tier-1, OJK basis): The return the shareholders actually earn on their capital — the number P/B is priced against.
Return on Invested Capital (ROIC)NOPAT ÷ (equity + max(net debt, 0)): Return on ALL capital regardless of who provided it — the number that must beat WACC for growth to create value.
Tax Burden (DuPont)net income ÷ pretax profit: The share of pretax profit that survives tax — one of the five DuPont levers of ROE.
Interest Burden (DuPont)pretax profit ÷ EBIT: How much operating profit the debt holders take before shareholders see it.
Equity Multiplier (DuPont)total assets ÷ total equity: The leverage lever of ROE — high ROE with a high multiplier is borrowed, not earned.

Cash flow & efficiency

Free Cash Flow (FCF)operating cash flow − capex: Cash actually left for owners and lenders after keeping the machine running — the DCF’s raw material.
Asset Turnoverrevenue ÷ total assets: Sales generated per unit of assets — the volume lever of ROE.
Inventory TurnoverCOGS ÷ inventory: How fast stock becomes sales; slowing turnover often precedes margin trouble.
Days Inventory Outstanding (DIO)365 ÷ inventory turnover: Days money sits as stock on a shelf.
Receivables Turnoverrevenue ÷ accounts receivable: How quickly customers actually pay.
Days Sales Outstanding (DSO)365 ÷ receivables turnover: Days between selling and collecting — rising DSO can flag channel stuffing or weak customers.
Payables TurnoverCOGS ÷ accounts payable: How quickly the company pays its own suppliers.
Days Payables Outstanding (DPO)365 ÷ payables turnover: Days of free financing taken from suppliers.
Cash Conversion Cycle (CCC)DIO + DSO − DPO: Days one rupiah stays trapped in operations before coming back as cash — shorter is structurally better.

Bank ratios (disclosed, OJK basis)

Capital Adequacy Ratio (CAR/KPMM)regulatory capital ÷ risk-weighted assets (disclosed): The regulatory loss-absorbing cushion; the binding constraint on how fast a bank may grow.
Leverage RatioTier-1 capital ÷ total exposure (disclosed, KM1): The non-risk-weighted backstop to CAR — harder to flatter with models.
Gross NPLnon-performing loans ÷ gross loans (disclosed): The share of the loan book that has stopped performing, before provisions.
Net NPLNPL net of provisions ÷ loans (disclosed): What is still unprovisioned against bad loans — the residual risk to equity.
Non-Performing Assetsnon-performing earning + non-earning assets ÷ total (disclosed): The broader problem-asset measure beyond loans alone.
NP Productive Assetsnon-performing earning assets ÷ earning assets (disclosed): Problem exposure inside the earning book specifically.
CKPN / Earning Assetsimpairment allowance ÷ earning assets (disclosed): How thickly the earning book is provisioned overall.
Net Interest Margin (NIM)net interest income ÷ avg earning assets (disclosed; Sharia: Net Imbalan): The core spread a bank earns on its book — the engine every bank P&L runs on.
BOPOoperating expenses ÷ operating income (disclosed): Indonesia’s standard bank-efficiency measure — lower is leaner.
Cost-to-Income Ratio (CIR)operating costs ÷ operating income (disclosed): The international cousin of BOPO — comparable across markets.
Loan-to-Deposit Ratio (LDR)gross loans ÷ third-party deposits (disclosed; Sharia: FDR): How fully the deposit base is deployed into lending; low LDR = dry powder, high = funding strain.
Net Stable Funding Ratio (NSFR)available stable funding ÷ required (disclosed, KM1): Structural funding stability over a one-year horizon.
Liquidity Coverage Ratio (LCR)high-quality liquid assets ÷ 30-day net outflows (disclosed, KM1): Can the bank survive a 30-day stress run on funding?

Bank ratios (derived from disclosed figures)

CASA Ratio(demand + savings deposits) ÷ total deposits: The share of cheap, sticky funding — the structural driver of NIM differences between banks.
Cost of Creditprovision expense ÷ avg gross loans: What lending actually costs after expected losses — the through-cycle margin killer.
Loan GrowthYoY change in gross loans: The volume engine; sustained growth above funding growth eventually strains LDR.
Deposit GrowthYoY change in third-party funds: The funding engine that has to keep pace with lending.
NPL Coverageimpairment allowance ÷ (gross NPL% × gross loans): How many rupiah of provisions stand behind each rupiah of bad loans; >100% = conservatively provisioned.

Valuation terms

P/Emarket cap ÷ net income (owners’ basis, trailing FY): Years of current earnings you pay for the whole company; NM when earnings are negative.
P/Bmarket cap ÷ book equity (owners’ basis): Price against accounting net worth — read TOGETHER with ROE: high ROE justifies high P/B.
P/Smarket cap ÷ revenue: The multiple of last resort for loss-makers — sales exist when profits don’t.
EV/EBITDA(market cap + debt − cash + minority interest) ÷ EBITDA: The capital-structure-neutral multiple — compares businesses regardless of how they are financed. Excluded for banks by construction.
EV/EBITenterprise value ÷ EBIT: Like EV/EBITDA but after depreciation — fairer to capex-heavy businesses.
EV/Salesenterprise value ÷ revenue: Capital-structure-neutral price on revenue.
FCF Yieldfree cash flow ÷ market cap: Cash return the business generates on today’s price; negative is real information, not an error.
Dividend Yielddividend per share ÷ price: The cash actually paid out, per rupiah invested at today’s price.
WACCwE × cost of equity + wD × cost of debt × (1 − tax); CoE = Rf + β × ERP: The hurdle every investment must clear; ROIC above WACC creates value, below destroys it.
Reverse DCFsolve for the growth that makes PV(FCF) = today’s EV: Instead of forecasting, it asks what the market is already assuming — then you judge whether that assumption is sane.
Terminal Value (TV)FCF final × (1 + g) ÷ (WACC − g), discounted back: The value of everything beyond the projection window; when TV dominates EV, the model is fragile — we show that share.
Excess-Return Model (banks)equity value = book value + Σ PV[(ROE − cost of equity) × book]: Banks cannot be valued on FCFF (debt is their raw material) — a bank earning exactly its cost of equity is worth exactly book; value above book must be earned as excess ROE.
Cyclical Normalizationmodel margin = full-window mean; model growth = terminal from year 1: For commodity names, last year’s earnings are a draw from the price cycle, not a trend — the normalized margin IS the embedded commodity-price assumption, stated instead of hidden.
Expectation Gapprice-implied FCF growth − delivered FCF CAGR: The distance between what the price demands and what the company has actually done — positive means the market is betting on a change, negative means it is pricing the record away.

Ratios omit with a stated reason instead of printing nonsense: a zero denominator or missing input renders as an em-dash, and “NM” marks a multiple that is not meaningful (e.g. P/E on a loss). Educational, not investment advice.

Equal

…